Safaricom Using EACC To Stop Airtel-Telkom Merger

Safaricom and Ethics and Anti-Corruption Commission (EACC) are to blame for the suspension of Airtel-Telkom merger, Telkom CEO Mugo Kibati has said.

Mugo addressed the media today, where he accused the two of pushing for monopolistic competition and leaving 575 laid-off employees in limbo.

Telkom and Airte announced their merger on February 8, to form a formidable entity that would rival giant telco, Safaricom and the deal was meant to finalise before December.

“We are staring at a possibility of a monopoly that leaves consumers with no choice for alternative products as well as investors at a distance to invest in such a market,” Kibati said.

Safaricom has already written to the Communications Authority opposing the intended merger of businesses, citing concerns that it wanted to be addressed first.

“We have no quarrel at all with our colleagues at Safaricom, we are simply trying to restructure and improve our own business and for the good of the industry. It is unfortunate, however, that Safaricom now wants to delay this process that seeks to provide customers with more credible options,” he added.

CA last month suspended the merger, saying that it was under investigation by EACC over alleged graft.

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Prior to the merger proposals, Telkom and the treasury was under investigation on how the government sold part of its stake to French firm Orange. Orange later sold its shares to UK firm Helios Investment, which currently holds 60 percent stake while the Government of Kenya holds 40 percent.

“We have advised the parties that, in light of government shareholding in Telkom Kenya, approval shall only be granted once all the conditions set out by the Authority are fulfilled and the transaction is cleared by EACC,” said Christopher Wambua, CA director in charge of communications and public affairs.

Among those targeted in the graft purge include senior managers at Telkom Kenya, Competition Authority of Kenya (CAK), CA and the Treasury.

On August 14, EACC wrote to CA requesting that the merger process be suspended, until the two investigations were concluded.

“Due to public interest, the commission (EACC) requests that you halt the processof merger pending the ongoing investigations. The commission is investigating an allegation of misappropriation of public funds in the process of recapitalisation and restructuring the balance sheet of Telkom Kenya Limited in 2012 and the current merger of Telkom Kenya with Airtel Kenya,” wrote EACC CEO Twalib Mbarak in the letter as quoted by Business Daily.

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